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Two-thirds of IFAs will cut fees for small pension pots


Almost two-thirds of advisers would be willing to reduce fees for clients with pension pots worth less than £50,000, research from MetLife reveals.

The research, which is based on a survey of 100 IFAs, found that 64 per cent would cut fees in order to provide a service to people with small pension pots.

MetLife UK managing director Dominic Grinstead (pictured) says: “With the onset of auto-enrolment in October 2012 and the predicted sharp rise in small pension pots, it is encouraging that the majority of advisers would be willing to offer advice at a reduced cost to those with savings worth less than £50,000.”

The study comes after a coalition of pension providers, trade bodies and politicians signed a joint letter calling on the Government and the FSA to address the risk a post-RDR advice gap could pose for people with small pension pots.


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. Assuming IFA’s reduce fees for small pension pots will the FSA not try and say that by doing so that is not treating customers fairly. How can one justify cutting fees for someone who has £50,000 then charge a higher fee to someone with say £200,000

  2. Met Life never asked me. How many were surveyed? C’mon Met Life, let us know.
    I certainly won’t be cutting my advice costs for sub £50k pots. I suggest we as a profession have seen our margins slashed by the rising business cost and RISK PREMIUM thrust down our collective throats by the FSA’s policies. It’s time to draw a line in the sand.

  3. We are members of Intrinsic Independent, our new model of charging means that peoplle with smaller pots will pay more per pound than those with larger ones.
    So this data is news to me.

  4. No, I wasn’t contacted either. Maybe they only spoke to people who had nothing else to do and therefore would be glad of business at any cost or compromise.

    If that represents 64% of our industry then we are in trouble!!

  5. David Trenner - Intelligent Pensions 16th April 2012 at 4:15 pm

    Are we running businesses or charities?

  6. How on earth can this be TCF?

    Somebody with a £35k pot paying less than somebody with a £1m pot [percentage basis or per pound].

    I have never heard such nonsense.

  7. Let’s all make a loss!!!!!

    Alternatively, why shoudl someone be forced to pay for a commoity (advice) which outweighs the benefits of taking advice?

    Setting aside the issue of older plans with guaranteed rates, would not the most straightforward thing be to say that for any pre 2001 plan due to the RU64 rule ( a PPP should only have been used in preference to a Stakeholder or NEST where a demonstrable need for a PPP could be shown), the Triviality rule should automatically be 3% of the lifetime allowance (i.e. £45,000) and any pre 2001 plan, the provider should cover the cost of the client speaking on a flat rate basis to a money advice service perosn on an INFORMATION only basis confirming a YES/NO of whetehr there is a guaranteed rate and therefore if advice must eb sort, for which the provider should have to fund a fixed amount.
    Much simpler and fairer than advising everyone with small pots and having to charge people with larger pots to subsidize smaller pots, which is completely anti TCF!

  8. man on the moon 16th April 2012 at 10:15 pm


    totally with your comments.

    what the client is paying for is service, knowledge, skill and the security of using a registered Advisor who always carries the Risk on advice provision.

    the reduction in costs is at odds with what many Advisors are actually doing so new one on me.

    perpetually surprised

  9. Surely you shoud be increasing your fees for smaller clients, no?

    I like to use the HSBC income factor, in that they must earn at least $1,000 per accountholder per annum otherwise it is not profitable.

    Using a quick FX rate, you should be charging 1.25% per annum to even speak with this client with the GBP50,000 pension.

  10. What has TCF got do with it? Why do people always try to cloudy the water by quoting TCF or is it done tongue in cheek?
    If TCF mattered to charging proceedures and cross subsidising then surely HMRC are the most guilty with the differing tax bands where the most wealthy subsidise the least well off.

  11. I would love to know where Metlife got these 100 respondents. Maybe they are a euromillions winning syndicate. Reduce fees for £50k pots post RDR? Are you mad? After all the extra expense that has been thrust upon us with RDR costs, exam costs, time spent studying instead of writing business, PII FSCS & FSA levies, we should (& I will be) increasing the chagre made inline with increases in my costs. I dont know about the rest of you but I need and intentend to earn a reasonable living. Why else am I in business?

  12. If I want to cut my fees for a client, that is my prerogative. It’s not treating someone else unfairly.

    In any event charges vary depending on the level of expertise I have to use and the professional risk I take, so it isn’t a failure of TCF.

    I can do pro bono work if I wish, but that doesn’t mean I am treating my paying clients unfairly. Get real guys!

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